This figure is eyebrow-raising, in that it is markedly higher than September’s 1.8 per cent of Metro Vancouver homes that were bought foreign buyers. However, it is still well below the 10 to 13 per cent that was typical before the foreign buyer tax was implemented August 2.

Some local news outlets have interpreted the continued relatively low level of foreign purchases as “proof” that the provincial government’s August-implemented foreign buyer tax is “working.” (Here’s one such headline.) And it’s easy to see why people might believe that to be true. After all, even three per cent is indeed an awful lot lower than the pre-tax norm of 10-13 per cent. And Metro Vancouver home sales in October were down nearly 40 per cent year over year. So it must be working – right?

Well, maybe – but not necessarily.

It’s worth remembering that local home sales are down across the board because people are in a wait-and-see mode while the market adjusts to the new tax (and to other measures such as new mortgage rules). It stands to reason, though, that a generous proportion of those wait-and-see purchasers are overseas buyers, because that new tax affects them directly. So we would expect to see a dramatic drop in foreign purchases in the months immediately following the new tax – it would be strange if that wasn’t the case.

Also, Metro Vancouver home sales were declining even before the tax was implemented – in fact, they hit a peak in March this year and have been dropping steadily ever since. So it is conceivable that the reduction in foreign purchases has not made that much difference to overall sales, which might have dropped anyways. Unfortunately, there's no way of telling what would have happened without the new policy.

Let’s do some easy math: Of a typical 5,000 Metro Vancouver home sales in a month, let’s say that foreign buyers now make up three per cent of those, so just 150 sales. Pre-foreign buyer tax, they would have made up 13 per cent, or 650 sales. That’s an extra 500 sales a month that one could argue would have involved overseas buyers. That’s only 10 per cent of our typical 5,000 sales that are missing – sales that either now go to local buyers, or don’t happen. So, for our year-over-year sales decline of 40 per cent, only one-quarter of that drop – at most – could be attributed to foreign buyers backing out of the market.

What’s more, the proportion of foreign buyers has been increasing since the low point of August, when it made up just 0.9 per cent of local home sales. September’s share was 1.8 per cent and October's, three per cent. Of course, this is not enough data to suggest a trend yet, but if that were to continue, it would suggest that the foreign buyer tax initially created a “policy shock” that those buyers are gradually becoming accustomed to, and simply factoring into their purchase. If this climb continues, who knows? – the proportion may eventually return to the double-digit levels seen before the tax.

To be clear, all of the above is not to say that the foreign buyer tax definitely isn’t doing what it intended. There has certainly been a drop in average sale prices of detached homes in the Greater Vancouver area, which is one effect that was presumably hoped for by when the Powers That Be launched the tax. Whether that price decline is a direct result of the tax, because having fewer foreign buyers in the market, or an indirect result, with buyers across the board holding back due to market uncertainty, is moot – the net effect is the net effect.

Nevertheless, history, and the natural ebbs and flows of the real estate market, would tell us that any new policy always upsets the order of things for a little while, before becoming the new normal. And until Vancouver becomes an undesirable place to live and invest in – which isn’t going to happen any time soon, barring catastrophe – we will most likely continue to see considerable foreign interest in our real estate.

Joannah Connolly is editorial director of Glacier Real Estate, Glacier Media's real estate division. Joannah writes and curates real estate news for Glacier Media's local newspaper websites, including the Vancouver Courier, North Shore News, Burnaby Now, Tri-City News and others. She also oversees editorial content in Real Estate Weekly Homes, West Coast Condo, Western Investor and Glacier's special real estate publications. A dual Canadian-British citizen, Joannah has 22 years of journalism and editing experience in Vancouver and London, with a background in construction, architecture, healthcare and business media. Joannah has appeared on major local TV outlets as a real estate commentator, has moderated and spoken on various industry panels, and spent two years hosting the Real Estate Therapist radio show on Roundhouse Radio.